Key takes from Finance Minister’s Budget Speech
By Ben Bierman
FINANCE Minister Tito Mboweni delivered his Budget Speech for the 2021/22 financial year on Wednesday.
There was some good news for consumers as Mboweni announced few tax hikes. Though no small business-specific amendments were noted, the budget contained favourable amendments for every market sector.
Here are five key takeaways for the local small-and-medium enterprise (SME) sector:
While the decrease on corporate tax may be relevant to larger businesses, it is interesting to note that the drop is likely to attract more international companies to South Africa, which could in turn spur creating more business opportunities. However, Mboweni said the National Treasury would also be limiting assessed losses and interest expense deductions. This means that companies may not actually see a decrease in their tax spend after all.
Mboweni indicated the government would be extending short-term economic support and undertaking reforms to stabilise public finances. He also mentioned the government’s planned economic reforms would remove barriers to growth, lower the cost of doing business, bolster confidence and investment in the restructuring of the electricity sector, ensuring sufficient supply.
Another good sign for small businesses was the Treasury’s recognition of the importance of affordable data. Mboweni said reducing the cost of broadband and other costs of doing business forms part of the measures of the Economic Reconstruction and Recovery Plan. He urged the government to accelerate the auctioning of the digital spectrum.
Mboweni mentioned a R540 million Tourism Equity Fund (TEF) to finance the acquisition of equity stakes in existing tourism enterprises, support expansion of operations and development of new operations. This has the potential to begin bolstering one of the hardest hit sectors from the last year. Beneficiaries are expected to include tourism enterprises from villages, townships and small towns.
A loan guarantee scheme was introduced to support certain businesses affected by Covid-19 and the resultant lockdown, for which Treasury provided a R100 billion guarantee to the SA Reserve Bank with the option to extend it to R200bn. By February 11, 2021, loans of R89.8bn had been approved with drawdowns of R13.3bn, indicating that there should be money left in the pot to help more businesses. While times are undoubtedly still very tough for businesses and consumers alike, the above indicates some steps in the right direction towards recovery for the country.
Ben Bierman is the managing director at Business Partners Limited
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